Semi-Annual
Market Review
HEALTH IT & HEALTH INFORMATION SERVICES
JULY 2020
www.hgp.com
Copyright© 2020 Healthcare Growth Partners
2
TABLE OF CONTENTS
Health IT Executive Summary
3
Private Equity Survey
5
Health IT Market Trends
10
Health IT M&A (Including Buyout)
13
Health IT Capital Raises (Non-Buyout)
18
Healthcare Capital Markets
19
Macroeconomics
23
Health IT Headlines
25
About Healthcare Growth Partners
28
HGP Transaction Experience
29
Appendix A – M&A Highlights
32
Appendix B – Buyout Highlights
35
Appendix C – Investment Highlights
37
1
11
10
9
8
7
6
5
4
3
2
12
13
Copyright© 2020 Healthcare Growth Partners
3
EXECUTIVE SUMMARY
1
COVID-19 has quickly and permanently changed the way business is conducted around the world.
Health IT was no exception, as providers rapidly shifted to virtual care delivery models enabled by
new CMS rules and technology that equips the American healthcare system with maximum flexibility
to respond to the COVID-19 pandemic. Together, these innovations accelerated the transformational
shift to “hospitals without walls”. While the Health IT and broader Healthcare industry have
undoubtedly received renewed attention during this public health crisis and will experience a long-
term lift, we have also observed a slowdown in the pace of transaction activity, albeit a more
measured slowdown when compared to that of other industries. The underlying sentiment for
Health IT is as strong as ever, as evident in our Private Equity Survey (beginning page 5). The
following six measures of Health IT activity during the first half of 2020 reflect the challenges of the
lockdown but overall reflect how Health IT continues to receive high investor interest due to
overwhelmingly strong fundamentals during this tough economic environment.
KEY MEASURES: COVID-19 IMPACT ON HEALTH IT
33
22
32
10
20
19
0
5
10
15
20
25
30
35
Jan
Feb
Mar
Apr
May
Jun
# of AcquisitionsMeasure #1: 1H 2020 US M&A Activity
2019 Avg., 27 deals
M&A SAW A SHARP DECLINE IN APRIL,
FOLLOWED BY A TENTATIVE RECOVERY IN
MAY AND JUNE. THE UNIVERSE OF
STRATEGICS BIFURCATED BETWEEN PASSIVE
AND ACTIVE ACQUIRORS, CONTRACTING
THE FIELD OF BUYERS. DUE TO THE
LIQUIDITY CRUNCH AND UNCERTAINTIES
ABOUT THE REOPENING OF THE ECONOMY,
IT IS LIKELY M&A ACTIVITY WILL REMAIN
STUNTED THROUGH THE REST OF 2020.
Measure #2: 1H 2020 US Investment Activity
44
35
43
29
46
30
0
10
20
30
40
50
Jan
Feb
Mar
Apr
May
Jun
# of Investments2019 Avg., 47 deals
BROADLY-SPEAKING, ACTIVITY IS DOWN
ACROSS MOST HEALTH IT INVESTMENT
THEMES BECAUSE OF COVID-19. THIS IS IN
PART DUE TO A CONTRACTING DEAL PIPELINE
AS WELL AS OVERALL RISK-AVERSION. THE
PRIMARY EXCEPTION IS THE REMOTE DELIVERY
OF CARE, WHICH SWIFTLY GAINED INTEREST AS
A RESULT OF CV-19. DEAL PIPELINE ACTIVITY
APPEARED TO BE RETURNING IN LATE Q2,
INDICATING A STRONGER 2H.
EXECUTIVE SUMMARY
Copyright© 2020 Healthcare Growth Partners
4
1
KEY MEASURES: COVID-19 IMPACT ON HEALTH IT
Measure #3: IPO Trends
COMPLETED
FILED
THE SURGE IN HEALTH IT IPOS THAT
STARTED IN 2019 CONTINUED INTO
2020, WITH 4 COMPANIES COMPLETING
THEIR IPO, AND ANOTHER 2 HOPING TO
CAPITALIZE ON THE MARKET’S REBOUND
IN 2H 2020. STRONG PUBLIC
VALUATIONS ARE ENTICING NEW OFFERS.
Measure #4: Public Equity Valuations
BIGGEST GAINS
BIGGEST LOSSES
NantHealth (NH) +344.7%
Livongo (LVGO) +200.0%
One Medical (ONEM) +159.4%
Teladoc (TDOC) +129.0%
Invitae (NVTA) +87.8%
Peloton (PTON) +79.1%
Veeva (VEEV) +66.7%
Benefitfocus (BNFT) -51.0%
Castlight (CSLT) -37.6%
NextGen (NXGN) -31.7%
Change (CHNG) -31.7%
Allscripts (MDRX) -31.0%
COMPANIES THAT FACILITATE THE
REMOTE DELIVERY OF CARE SAW
SIGNIFICANT INCREASES IN VALUE, WHILE
THOSE SUSCEPTIBLE TO A REPLACEMENT
MARKET OR THE RECENT DOWNTURN IN
CASE VOLUME SAW VALUE DECLINE. AS
EVIDENT BY THE NASDAQ, TECH
VALUATIONS ARE AT RECORD HIGHS.
Measure #5: Private Equity Valuations
Inbound deal volume
Focus on Health IT vs Other Sectors
HIT Valuations - short-term
Overall Valuations - short-term
HIT Valuations - long-term
Overall Valuations - long-term
COVID-19 Effect on Valuation
Significant
Decline
Neutral
Significant
Increase
OVER THE SHORT-TERM,
INVESTORS WERE SLIGHTLY
BEARISH ON VALUATION AND DEAL
FLOW, BUT SEEM TO EXPECT THAT
HEALTH IT MAY BE MORE
RESILIENT THAN THE OVERALL
MARKET IN THE LONG-TERM, WITH
BOTH VALUATIONS AND INTEREST
EXPECTED TO RISE OVER TIME.
Measure #6: Health IT Sector Interest
PATIENT-FACING SOLUTIONS HAVE
GAINED INTEREST IN THE COVID-19
ERA AS WELL THOSE LEVERAGING DATA,
INCLUDING AI, TO ENHANCE OUTCOMES
AND THE DELIVERY OF CARE. SECTORS
DIRECTLY IMPACTED BY THE REDUCTION
IN PROCEDURES, SUCH AS RCM, FACED
NEAR-TERM CHALLENGES.
<$100mm
30%
$100-$500mm
38%
$500mm-$1bn
16%
>$1bn
16%
RESPONDENTS BY SIZE OF FUND
5
PRIVATE EQUITY SURVEY
Private Equity in the Era of COVID-19: Findings from HGP’s PE Survey
2
In May, as the U.S. cautiously started to reopen amid intense controversy, HGP polled hundreds of
private equity funds across all stages of investment to find out how COVID-19 has impacted deal flow.
Eighty respondents provided their perspective on topics ranging from appetite for new investments
to access to debt to the impact on portfolio companies.
RESPONDENT DEMOGRAPHICS
Copyright© 2020 Healthcare Growth Partners
Growth
Equity
33%
Venture Capital
38%
Buyout
29%
RESPONDENTS BY FUND TYPE
50%
4%
18%
40%
8%
14%
10%
46%
23%
0%
38%
27%
0%
4%
18%
0%
0%
5%
0%
10%
20%
30%
40%
50%
60%
Venture Capital
Growth Equity
Buyout
None
≥ $1mm
≥ $5mm
≥ $10mm
≥ $20mm
≥ $50mm
REVENUE THRESHOLDS BY FUND TYPE
The response to revenue thresholds highlights the key distinction of revenue criteria between each
investor category. Notably, thresholds overall seem to have moved slightly up for venture capital and
growth equity funds, with 10% and 88% reporting a threshold greater than $5mm, respectively
(figures for 2018 were 0% and 79%). On the other hand, buyout funds appear to have lowered their
thresholds, with 73% reporting a threshold of at least $5mm, down from 82% in 2018.
PRIVATE EQUITY SURVEY
6
2
EFFECT OF COVID-19 ON VALUATIONS
When asked how they expect overall and Health IT valuations to behave in both the short-term and
the long-term, investors were largely neutral on average, with only a very slightly bearish perspective
in the short-term. Over the long-term, investors indicated a much more neutral impact of COVID-19
on valuations, with a slightly more bullish perspective on Health IT as a sector compared to the
overall market.
Copyright© 2020 Healthcare Growth Partners
0.0%
20.0%
40.0%
60.0%
80.0%
Patient/Patient Family
Pharma/Device
Physicians
Other Clinical Settings (urgent care, post-acute)
Hospital/Health System (including ACO)
Payer/TPA/Employer
Percent of Respondents that Marked Interested
INTEREST BY CUSTOMER SEGMENT BEFORE AND AFTER COVID-19
Before COVID-19
After COVID-19
HEALTH IT INTERESTS BY SUBSECTOR AND CUSTOMER SEGMENT
Our survey included a series of questions designed to identify how COVID-19 may have altered
investor appetite across the subsectors and end-markets of Health IT. As hypothesized, we saw a rise
in interest in telemedicine and remote care delivery, as well as direct-to-patient healthcare solutions.
At the other end of the spectrum, solutions such as EMR/clinical documentation and revenue cycle
management saw a drop in interest and 12.5% fewer of our respondents were interested in investing
in companies serving the hospital and health system end-market after COVID-19 compared to before.
These results lead us to conclude that investors are tracking the decline in hospital revenue due to
COVID-19 and accordingly expect that sales of new technologies to hospitals will be challenged.
Inbound deal volume
Focus on Health IT vs Other Sectors
View of HIT Valuations over the short-term
View of Overall Valuations over the short-term
View of HIT Valuations over the long-term
View of Overall Valuations over the long-term
COVID-19 EFFECT ON VALUATION AND DEAL FLOW, HEALTH IT VERSUS OVERALL
Significant
Decline
Moderate
Decline
Neutral
Moderate
Increase
Significant
Increase
PRIVATE EQUITY SURVEY
7
2
Copyright© 2020 Healthcare Growth Partners
CHANGE IN PE ACTIVITY AND FOCUS
Overall, investors are seeing reduced deal flow, but continuing to seek out opportunities to invest
despite the challenged environment. While some indicated they are looking at more distressed and
discounted opportunities, that does not seem to be an overarching focus for our respondents. Given
the rapidly evolving situation, approximately 25% of respondents were either still evaluating how to
respond to the COVID-19 shutdown or had decided to pause on new deals for the time-being until
the market stabilizes.
0.0%
20.0%
40.0%
60.0%
80.0%
Life Sciences Technology
Digital Therapeutics
EMR/Clinical Documentation
Payer Services
Benefits Technology
Care Management & Employee Wellness
Interoperability and Data Integration
Revenue Cycle Management Tech or Services
Population health
Infrastructure Technology
Virtual Care, Remote Care, or Telemedicine
Percent of Respondents that Marked Interested
THEMATIC INTEREST WITHIN HEALTH IT BEFORE AND AFTER COVID-19
Before COVID-19
After COVID-19
0.0%
10.0%
20.0%
30.0%
40.0%
Focusing on Investments that Address COVID-19
Pausing on All New Deals
Closing on Existing Deals, but Pausing on New…
Currently Evaluating and Still Unsure
Pivoting to Distressed or Discounted Opportunities
No Change
Slowing Deal Flow but Still Nurturing Conversations
INVESTOR RESPONSE TO THE COVID-19 SHUTDOWN
PRIVATE EQUITY SURVEY
8
2
Copyright© 2020 Healthcare Growth Partners
PORTFOLIO COMPANY STRATEGIES
We asked our respondents to estimate the percentage of their portfolio companies employing each
of the following strategies. From these responses, we estimated the average percentage of portfolio
companies employing each strategy. Fewer than 10% of portfolio companies were estimated to have
had no change to operations due to COVID-19, exhibiting the widespread impact COVID has had on
businesses. Many companies are applying for federal relief, seeking additional capital to cover costs,
reducing payroll, or delaying payables in order to manage until the economy recovers.
ACCESS TO DEBT
One of the clearest impacts of COVID-19 is a tightening of the debt markets as investors flee to safer
assets. Despite Fed actions to lower interest rates and encourage lending, our respondents from the
PE community are seeing challenges in accessing debt. Based on the survey responses, accessing
debt for existing platforms for either working capital or add-on acquisitions appears to be less
challenging compared to that for new platforms.
0%
10%
20%
30%
40%
50%
60%
For Add-on Acquisitions
For Working Capital
For New Platform Investments
% OF RESPONDENTS REPORTING SOME OR SIGNIFICANT CHALLENGE ACCESSING DEBT
Somewhat Challenged
Significantly Challenged
0%
10%
20%
30%
40%
50%
No Change
Hiring more employees
Company-wide pay cuts
Shifting product or market strategy
Laying off employees
Furloughing employees
Delaying payables
Accessing additional capital to cover costs
Applying for Federal Gov. Relief Programs
ESTIMATED % OF PORTFOLIO COMPANIES:
PRIVATE EQUITY SURVEY
9
2
Copyright© 2020 Healthcare Growth Partners
WILL PRIVATE EQUITY CLOSE DEALS?
To conclude our survey, we asked the question on everyone’s mind – will private equity investors
close deals over the next few months before the Fall / Winter? Overwhelmingly, our respondents
indicated that they intend to continue to operate, with no respondents choosing “not likely.” Nearly
50% of respondents expect to continue with new deals as usual, with the remaining 50% indicating
that they intend to continue with new deals, but that there may be restrictions on valuation or need
to be highly strategic.
EXPECTATIONS FOR THE RECOVERY
Overwhelmingly, our respondents expect the economic recovery to be either W-shaped or U-shaped,
essentially meaning that an economic recovery will be delayed, but that it will be relatively quick
once it occurs. Now over 2 months into the downturn, there appears to be consensus that a V-
shaped recovery is unlikely as consumers will continue to social distance until there is an effective
vaccine or treatment for COVID-19. A few respondents expect a drawn-out L-shaped recovery,
reflecting a general sentiment that the recovery probably won't begin in earnest until late 2020 and
beyond.
0%
10%
20%
30%
40%
50%
W-Shaped
U-Shaped
L-Shaped
Unknown
V-Shaped
EXPECTED SHAPE OF THE ECONOMIC RECOVERY
Yes – deal
flow
continuing
as usual
48%
Yes – only if
highly strategic
22%
Yes – only
at the right
price
30%
INTENT TO CLOSE DEALS BEFORE THE FALL/WINTER
10
HEALTH IT MARKET TRENDS
3
HGP keeps close tabs on M&A valuations to see how the market evolves over time. While we can
only draw data from deals with disclosed multiples and therefore must be careful to consider bias in
any conclusions we draw from this data, we can still get a good sense for how the market values
companies within the different subsectors of Health IT. The following table and accompanying box-
and-whisker plot show the distributions of revenue multiples in 13 subsectors of Health IT. The
sectors were sorted according to median revenue multiple from largest to smallest.
We believe it’s important to keep dispersion in mind when assessing valuation data, which is why we
include the 25th percentile, 75th percentile, and standard deviation in our summary statistics. While
measures of central tendency like the median and mean are certainly indicative of how buyers are
valuing assets, the dispersion shows that with higher multiples, we also see higher risk. This becomes
especially apparent when we chart the data using a box-and-whisker plot. While telemedicine,
population health, and analytics see the highest median revenue multiples, these sectors also see a
large amount of variability and positive skew. For instance, while 25% of the observed telemedicine
companies received 10.0x revenue or more in sale transactions during the period, another 25%
received less than 4.1x revenue at exit. Companies in these hot spaces cannot forget that they still
need to show strong operating metrics in order to recognize premium valuation multiples.
It is worth noting that the multiples reported here cover the time period from 2015 through the first
half of 2020. COVID-19 has very quickly changed the global economy, which means that these
multiples may not be representative of valuations across Health IT sectors in the future.
Reported
2015 – 1H 2020
Deals with
Disclosed
Revenue
Multiples
Deals with
Disclosed
EBITDA
Multiples
Revenue Multiple
EBITDA
Multiple
25th
%-tile
Median
75th
%-tile
Mean
Std.
Deviation
Median
Clinical Trial Mgmt
6
5
2.2x
6.6x
7.6x
5.5x
3.0x
15.2x
Telemed
12
4
4.1x
6.3x
10.0x
7.1x
3.9x
13.1x
Analytics
21
8
3.4x
4.4x
5.5x
4.8x
2.3x
17.7x
Population Health
41
10
2.5x
4.3x
6.6x
5.7x
5.1x
14.2x
Benefits Mgmt
12
1
2.1x
3.9x
4.2x
3.8x
2.2x
15.0x
Infrastructure Tech
25
12
2.5x
3.8x
5.3x
4.0x
1.8x
10.3x
PM/EMR
36
21
2.1x
3.7x
5.1x
3.8x
2.0x
15.0x
Content
11
3
2.4x
3.5x
4.5x
4.4x
3.1x
8.3x
RCM Tech
20
15
2.8x
3.4x
6.1x
4.2x
2.1x
16.0x
Consulting
17
7
1.6x
2.0x
2.7x
2.4x
1.4x
12.0x
RCM Services
12
9
1.4x
1.9x
2.4x
1.9x
0.9x
9.0x
Utilization Mgmt
6
3
0.7x
1.8x
2.7x
1.8x
1.1x
10.9x
Outsourced Services
18
11
1.2x
1.8x
2.7x
2.1x
1.2x
10.0x
Copyright© 2020 Healthcare Growth Partners
HEALTH IT MARKET TRENDS
11
3
The box-and-whisker plot graphically displays the Median, 25th Percentile, 75th Percentile,
Minimum, and Maximum; where points beyond 1.75 times the Inter-Quartile Range are shown as
outliers. The Inter-Quartile Range (blue columns) is the 75th Percentile minus the 25th Percentile and
serves to describe the variation in the range of outcomes. Note that point estimates such as the
mean or median can often be misleading on their own, as they do not convey the level of variability
which can be very high such as in the Telemedicine, Population Health, or Benefits Management
sectors.
The sectors were sorted according to decreasing median revenue multiple and show a trend of
decreasing IQR as median revenue multiple decreases. Thus, while companies that fall within sectors
further to the right on the graph can expect a lower revenue multiple in a transaction, the transaction
is also much more predictable. A company that falls within a sector on the left, however, cannot
have as strong a confidence in their expected outcome. These observations follow a common theme
in investment theory: that with greater potential upside, there is also greater risk and volatility.
While the metrics presented here may be used as a guidepost for expected outcomes, the end result
of any transaction often depends on buyer circumstances as much as on seller or market
fundamentals, and buyer circumstances tend to be extremely unpredictable. It is not uncommon for
the clearing price of a transaction to be significantly higher than the cover bids. This usually occurs
when a buyer has unique circumstances that justify a higher price than the rest of the buyer universe.
Identifying those buyers and appropriately positioning in relation to them is part of the art of running
a successful transaction process.
Copyright© 2020 Healthcare Growth Partners
HEALTH IT MARKET TRENDS
12
3
Sector
Description
Representative Deals
Clinical Trial Mgmt (6 deals)
Median: 6.6x
Std. Dev.: 3.0x
Includes traditional CTMS vendors as
well as other vendors that deliver
value in the clinical trial process.
Medidata (Dassault Systemes), Bracket
Global (Genstar Capital), Phlexglobal
(Vitruvian Partners)
Telemed (12 deals)
Median: 6.3x
Std. Dev.: 3.9x
Contains a mix of pure telemedicine
services and connected device
transactions.
AbleTo (United Health), Stratus Video
(AMN Healthcare), PillPack (Amazon),
Best Doctors (Teladoc)
Analytics (21 deals)
Median: 4.4x
Std. Dev.: 2.3x
Primarily represents a mix of life
sciences and provider analytics, and
to a lesser extent, payer analytics.
Central Logic (Rubicon Venture
Partners), Truven (IBM), IMS (Quintiles),
MedeAnalytics (Thoma Bravo)
Population Health (41 deals)
Median: 4.3x
Std. Dev.: 5.1x
Comprised of patient engagement,
provider connectivity, and care
management technologies.
Propeller Health (ResMed), Emmi
(Wolters Kluwer), Press Ganey (EQT),
Wellcentive (Philips), Phytel (IBM)
Benefits Management (12 deals)
Median: 3.9x
Std. Dev.: 2.2x
Includes benefits management and
admin software companies serving
payers and employers.
Connecture (Francisco Partners),
HealthX (JMI), Benaissance (WEX),
bswift (Aetna), Matrix (Express Scripts)
Infrastructure Tech (25 deals)
Median: 3.8x
Std. Dev.: 1.8x
Compliance and resource
management software generally
serving provider organizations.
Symplr (Clearlake), Datix (Rothschild),
Morrisey (HealthStream), CenTrak
(Halma), VendorMate (GHX)
PM/EMR (36 deals)
Median: 3.7x
Std. Dev.: 2.0x
Includes ambulatory, acute, post-
acute, alternate site, and
departmental EMR/PM systems.
Intelerad (HGCapital), athenahealth
(Veritas), Kinnser (Mediware), Netsmart
(Allscripts/GI), Merge (IBM)
Content (11 deals)
Median: 3.5x
Std. Dev.: 3.1x
Transactions are a mix of online
consumer content and provider-
oriented clinical content.
WebMD (Internet Brands), Quantum
Health (Great Hill Partners), Everyday
Health (j2 Global)
RCM Tech (20 deals)
Median: 3.4x
Std. Dev.: 2.1x
Includes tech-oriented RCM vendors
serving hospitals and physicians, and
to a lesser extent, payers.
eRx Network (Change Healthcare),
InstaMed (JPMorgan), ABILITY
(Inovalon), Zirmed (Navicure)
Consulting (17 deals)
Median: 2.0x
Std. Dev.: 1.4x
Project-based IT consulting and staff
augmentation companies generally
serving provider organizations.
Kinapse (Syneos), Advisory Board
(UnitedHealth), HCI Group (Tech
Mahindra), CynergisTek (Auxilio)
RCM Services (12 deals)
Median: 1.9x
Std. Dev.: 0.9x
Outsourced revenue cycle
management services generally
serving hospitals and physicians.
MedPartners (AMN), Intermedix (R1),
Anthelio (Atos), Cardon (MedData),
Equian (New Mountain)
Utilization Mgmt (6 deals)
Median: 1.8x
Std. Dev.: 1.1x
Payer-oriented software and services
vendors focused on traditional
utilization management.
New Century (Evolent), HealthHelp
(WNS), Alere (Abbott), HSM & CDMI
(Magellan)
Outsourced Services (18 deals)
Median: 1.8x
Std. Dev.: 1.2x
Includes non-RCM outsourced
services primarily serving payers as
well as providers.
Sedgwick & MedRisk (Carlyle Group),
InVentiv (INC Research) Patriot National
(Ebix), HealthPlan Holdings (Wipro)
The following table provides additional context on the valuation trends within each sector as well as a
sample of recent transactions within each.
Copyright© 2020 Healthcare Growth Partners
13
HEALTH IT M&A (INCLUDING BUYOUT)
4
HGP has observed a number of tangible and intangible company and transaction characteristics that
typically define where a deal falls on the valuation distribution. Growth, profitability, and recurring
revenue are the most commonly identified factors used to justify valuation multiples. Not all health
IT companies capture premium valuations just because they operate in health IT. However, those
companies that offer a combination of growth, address an unmet need, and fit into the vision of
healthcare reform are seeing valuations significantly higher than historical patterns of activity.
Premium value is also created when a seller fulfills the specific needs of a buyer at a specific point in
time. Timing and serendipity are external factors that play a large and sometimes unpredictable role
in the creation of value.
HEALTH IT REVENUE MULTIPLES DISTRIBUTION
Among the many business and market characteristics that drive superior valuations, the following are
core components to healthcare IT businesses that have established themselves as outliers:
1 SaaS Architecture and Delivery
• Single database enabling robust analytics
• Delivery model that creates scale on the
cost side, and recurring revenue on the
top line
2 Pricing Alignment with ROI
• Pricing methodology that aligns with
customer ROI – the vendor wins when
the customer wins
3 Scalable Distribution Model
• Efficient distribution model (eg, customer
acquisition cost
is
less
than
total
customer value)
4 Data Rights
• Contract structures that contain explicit
rights to data
5 Reform-Centric Value Proposition
• Addresses healthcare structural flaws
rather than take advantage of them in
an effort to deliver sustainable change
in a policy-based environment
6 Pricing Alignment with ROI
• Market leadership (or opportunity to
lead) creates favorable supply/demand
characteristics at exit
• Large and growing market opportunity
with strong financial characteristics
which include recurring revenue and
growth,
inherent scalability
if not
profitability, strong management, and
size
Copyright© 2020 Healthcare Growth Partners
0%
10%
20%
30%
40%
50%
0-1X
1-2X
2-3X
3-5X
5-7X
7-10X
>10X
Software
Services
HEALTH IT M&A (INCLUDING BUYOUT)
14
4
The following chart summarizes annual M&A activity since 2015, according to the Healthcare Growth
Partners database.
2020 saw a reversal of the trend over the last few years, with deal value and volume down during the
first half of the year, no doubt because of the COVID-19 driven economic recession. After 365
transactions in 2018 and 405 transactions in 2019, we have seen 186 transactions so far in 2020
which equates to 372 when annualized. Most of the slowdown appears to be in the U.S. market, with
international M&A activity generally on track to match prior years. Overall, the Health IT M&A
market has fared remarkably well during the first half of the year considering the disruptive impact of
COVID-19.
Generally, sub $100 million companies have three valuation inflection points: proof-of-concept,
growth scalability, and mature scalability.
0
5
10
15
20
25
30
0
2
4
6
8
10
12
14
16
Stage of Growth Valuation
Proof of Concept
Growth Scalability
Mature Scalability
Revenue <$1mm
Revenue $5-10mm
Revenue >$20mm
Stage of Growth Chart (for Companies <$100mm in Revenue)
Copyright© 2020 Healthcare Growth Partners
$14,074
$53,864
$28,978
$37,226
$42,437
$9,224
$1,084
$905
$771
$1,090
$2,177
$1,603
285
293
301
288
319
136
51
77
70
77
86
50
0
50
100
150
200
250
300
350
2015
2016
2017
2018
2019
1H-2020
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
$60,000
Deal VolumeDeal Value ($mm)Deal Value - US
Deal Value - Non-US
Deal Volume - US
Deal Volume - Non-US
HEALTH IT M&A (INCLUDING BUYOUT)
15
4
Proof-of-concept is value created when a company shows that its product can be successfully sold
and deployed in a commercial setting. The proof-of-concept inflection point is generally of more
importance to venture investors than it is to acquirers, as companies at this stage tend to be too
immature to realize significant value through a sale. Growth scalability occurs when an earlier stage
company begins to show profitability or at least scale at high levels of growth, although the
organization is still small and lean. Mature scalability takes place after a company has matured to a
level where it takes on real infrastructure, and the company begins to show strong profitability after
building out a mature corporate organization.
Although the size of a company at each inflection point can vary significantly based on a company’s
product or services and sector, the general rule of thumb in health IT is that proof of concept occurs
at revenue of less than $1 million, growth scalability occurs in the $5 to $10 million revenue range,
and mature scalability occurs starting in the $20 million revenue range.
HIT Software Companies
HIT Services Companies
Revenue
Multiple
EBITDA
Multiple
Transaction
Value
Revenue
Multiple
EBITDA
Multiple
Transaction
Value
All
Transactions
# of Transactions
184
79
189
54
31
56
Median
4.0x
14.5x
$ 140.00
2.0x
9.6x
$ 167.36
Mean
4.7x
15.3x
$ 500.02
2.1x
10.9x
$ 711.62
<$30mm
Transactions
# of Transactions
47
10
44
11
7
11
Median
3.1x
9.8x
$ 10.21
1.6x
9.0x
$ 15.90
Mean
4.1x
10.9x
$ 12.36
1.6x
8.9x
$ 14.78
$30-100mm
Transactions
# of Transactions
34
16
34
15
8
15
Median
3.2x
11.6x
$ 50.15
1.5x
8.5x
$ 45.00
Mean
4.4x
12.4x
$ 54.82
1.7x
8.1x
$ 49.01
$100-500mm
Transactions
# of Transactions
66
26
69
18
10
18
Median
4.3x
14.5x
$ 195.00
2.0x
11.0x
$ 287.50
Mean
4.9x
16.9x
$ 229.27
2.4x
11.4x
$ 306.10
$500mm-$1B
Transactions
# of Transactions
18
11
21
3
0
3
Median
5.5x
16.2x
$ 700.00
2.7x
NA
$ 690.00
Mean
5.6x
17.5x
$ 690.03
3.2x
NA
$ 680.00
>$1B
Transactions
# of Transactions
19
16
21
7
6
9
Median
5.0x
16.6x
$ 2,010.00
2.4x
14.9x
$ 3,200.00
Mean
5.4x
17.0x
$ 2,942.17
2.6x
16.0x
$ 3,489.21
Copyright© 2020 Healthcare Growth Partners
HEALTH IT M&A (INCLUDING BUYOUT)
16
4
Continuing the analysis on the prior page, HGP evaluated the distribution of transaction size by target
enterprise value. HIT Software valuations experience a nice inflection above $30mm in value, which
steadily climbs until approximately the $1B valuation mark. HIT Services multiples experience a
similar inflection at $100mm, especially with higher percentile transactions. The inflection points are
in part due to a private equity universe that has expanded leverage capacity for larger transactions,
which in turn drives up valuation multiples.
In the first half of 2020, Healthcare Growth Partners monitored 186 health IT and related services
M&A transactions, compared to 405 transactions in 2019. In terms of aggregate deal dollar value,
HGP observed $10.8 billion of total transaction value so far in 2020, a decline compared to the $19.9
billion of transaction value observed during the six months of 2019. The median revenue multiple in
2020 so far is 4.7x for HIT Software, between the 4.2x observed in 2019 and the 5.0x high water mark
observed in 2018.
Detailed annual trends can be found in the following bar charts. It should be noted that valuation
multiple trends can be very volatile given the limited availability of data. Refer to Appendices A and B
for a list of notable M&A and Buyout transactions in 1H 2020.
HIT Software Revenue Multiple Distribution by Target Enterprise Value
Percentile
<$30mm
$30-100mm
$100-500mm
$500mm-$1B
>$1B
90th Percentile
6.6x
9.9x
8.3x
8.5x
8.6x
75th Percentile
4.7x
5.4x
6.2x
7.1x
7.0x
50th Percentile
3.1x
3.2x
4.3x
5.5x
5.0x
25th Percentile
2.0x
2.5x
2.9x
3.8x
3.7x
HIT Services Revenue Multiple Distribution by Target Enterprise Value
Percentile
<$30mm
$30-100mm
$100-500mm
$500mm-$1B
>$1B
90th Percentile
2.4x
2.8x
5.4x
nm
nm
75th Percentile
2.1x
2.3x
3.0x
nm
3.2x
50th Percentile
1.6x
1.5x
2.0x
2.7x
2.4x
25th Percentile
1.2x
0.9x
1.5x
nm
2.2x
Copyright© 2020 Healthcare Growth Partners
3.8X
3.9X
3.4X
5.0X
4.2X
4.7X
14.0X
14.0X
14.0X
15.6X
14.8X
16.1X
0.0X
5.0X
10.0X
15.0X
20.0X
2015
2016
2017
2018
2019
2020
Health IT SoftwareRevenue
EBITDA
HEALTH IT M&A (INCLUDING BUYOUT)
17
4
It is important to note that transaction multiples are based on trailing-twelve-month financial
information, assume the achievement of all contingent consideration, such as earnouts, and most
EBITDA multiples do not include any adjustments for unusual items. It is also important to note that
less than one-third of transactions contain a disclosed multiple, therefore the multiple data
represents only a portion of the overall transaction activity and may include sampling bias.
MEDIAN M&A MULTIPLES 2015 THROUGH 1H-2020
HIT M&A DEALS BY QUARTER
Copyright© 2020 Healthcare Growth Partners
2.0X
1.8X
1.9X
2.4X
2.0X
0.6X
9.0X
10.0X
9.6X
10.2X
10.8X
0.0X
0.0X
5.0X
10.0X
15.0X
2015
2016
2017
2018
2019
2020
Health IT ServicesRevenue
EBITDA
NA
90
68
93
85
99
86
102
83
96
89 91
95
82
106
97
80
102
89
97
117
111
75
0
20
40
60
80
100
120
140
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2015
2016
2017
2018
2019
2020
18
HEALTH IT CAPITAL RAISES (NON-BUYOUT)
5
The chart below summarizes quarterly private-equity and venture capital activity in Health IT and
related services since 2015 according to the Healthcare Growth Partners database. The data below
and in this section do not include buyout private equity activity. In the first half of 2020, Healthcare
Growth Partners monitored 373 capital raise transactions amounting to $7.9 billion in value, a
declining trend compared to the $16.9 billion raised across 827 transactions in 2019.
HIT INVESTMENT ACTIVITY
HIT INVESTMENT DEALS BY QUARTER
Refer to Appendix C for a list of notable non-buyout capital raises in 1H 2020.
Copyright© 2020 Healthcare Growth Partners
$6,173
$5,724
$7,584
$10,874
$11,191
$5,672
$996
$2,370
$3,171
$5,678
$5,679
$2,191
362
362
414
545
565
227
66
133
252
254
262
146
0
100
200
300
400
500
600
2015
2016
2017
2018
2019
1H-2020
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
Deal VolumeDeal Value ($mm)Deal Value - US
Deal Value - Non-US
Deal Volume - US
Deal Volume - Non-US
88
122
101
115 107 97
135
155
128
190 189
154
203
238
197
156
180
236
209 200 191 182
0
20
40
60
80
100
120
140
160
180
200
220
240
260
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2015
2016
2017
2018
2019
2020
19
HEALTHCARE CAPITAL MARKETS
6
HGP tracks a basket of stock indices within health IT and closely related sectors. It is important to
consider sectors outside of pure “HIT” because the universe of health IT and related services
encompasses many companies that share similar characteristics to other healthcare sectors. What
classifies a company in the universe of health IT and related services, and ideally creates a valuation
premium, is a strong information technology and data component that creates scalability and
competitive strength. This is particularly relevant to services organizations that use technology and
data analytics to streamline their operations. With this in mind, HGP considered six sectors when
evaluating the performance of publicly traded companies – details of the components of these
sectors can be found on page 22.
All 6 indices felt the effects of COVID-19 and plunged alongside the S&P 500 in the first quarter of
2020. Fueling the flames on the healthcare front was the increasing sentiment that Bernie Sanders,
with the most disruptive Medicare for All plan on the ticket, could lead the democratic ballot in
November. Remarkably, all indices rebounded in Q2, with the Health IT, Payers, and CRO Indices all
exceeding the S&P 500 in their recovery. The 3 indices most focused on services (PBM, Healthcare
services, and HIT & Payer Services) have not fully recovered and continue to feel the pressure from
COVID-19 as hospitals continue to struggle amidst the halt of elective procedures. The chart and the
table on the following page summarize the performance of the HGP Indices in 1H 2020.
HIT & RELATED INDEX PERFORMANCE 1H 2020
Jan 21. – First case of coronavirus in
the U.S reported
Feb. 25 – Bernie Sanders sees a big
win in Nevada, plunging payer stock
May 4 – Trump pushes to reopen as virus
toll begins to double
June 23 – Hospitals lose lawsuit against
HHS over price disclosure rule
1H 2020 Index Performance
S&P 500
-4.0%
HIT
25.4%
Healthcare Services
-21.8%
NASDAQ
12.1%
Payers
3.3%
HIT & Payer Services
-27.2%
CRO
-1.9%
PBM
-10.1%
March 17 – OCR eases restrictions on
telemedicine tech
April 19 – CMS recommends opening
HC systems with low CV-19 incidence
Copyright© 2020 Healthcare Growth Partners
-60%
-40%
-20%
0%
20%
12/31/19
3/31/20
6/30/20
CRO
Health IT
Payers
PBM
Healthcare Services
HIT & Payer Services
S&P 500
HEALTHCARE CAPITAL MARKETS
20
6
Company
Share Price
% Change
EV/
Rev
EV/
EBITDA
Company
Share Price
% Change
EV/
Rev
EV/
EBITDA
Allscripts
-31.0%
1.2X
7.4X
Model N
-0.9%
7.6X
NMF
Benefitfocus
-51.0%
2.0X
19.4X
NantHealth
344.7%
9.1X
NMF
Care.com
-0.2%
NA
NA
NextGen Healthcare
-31.7%
1.4X
8.0X
Castlight Health
-37.6%
0.7X
NMF
NRC Health
-11.7%
NA
NA
Cerner
-6.6%
3.9X
12.8X
Omnicell
-13.6%
3.3X
19.5X
Change Healthcare
-31.7%
2.4X
8.0X
One Medical
159.4%
14.7X
NMF
CPSI
-13.7%
1.7X
10.6X
Peloton
79.1%
8.7X
NMF
ehealth
2.2%
3.7X
17.8X
Phreesia
6.2%
8.2X
NMF
Evolent Health
-21.3%
0.9X
NMF
Premier
-9.5%
3.3X
7.4X
Fitbit (US)
-1.7%
1.3X
NMF
Progyny
-6.0%
6.1X
NMF
Health Catalyst
-15.9%
5.3X
NMF
Roper Technologies
9.6%
8.3X
23.8X
HealthEquity
-20.8%
10.1X
27.6X
Simulations Plus
105.8%
26.4X
NA
HealthStream
-18.6%
2.5X
16.2X
SmileDirectClub
-9.6%
5.2X
NMF
Hms Holdings
9.4%
4.3X
16.4X
Streamline Health
-4.3%
2.0X
18.0X
Inovalon Holdings
2.3%
5.7X
17.1X
Tabula Rasa Healthcare
12.4%
4.4X
NMF
Invitae
87.8%
14.8X
NMF
Teladoc Health
128.0%
18.2X
NMF
IQVIA
-8.2%
3.6X
17.5X
Veeva Systems
66.7%
31.0X
NMF
iRhythm Technologies
70.2%
13.3X
NMF Vocera Communications
2.1%
3.2X
NMF
Livongo
200.0%
23.2X
NMF
Multiples based off 2020E
Revenue and EBITDA
Revenue Multiples
EBITDA Multiples
Sector
2020E
2021E
2020E
2021E
Health IT
4.4X
3.7X
13.1X
16.8X
CRO
3.3X
2.9X
16.5X
17.1X
Payers
0.7X
0.6X
12.5X
9.4X
PBM
0.6X
0.5X
9.7X
10.7X
Healthcare Services
1.5X
1.4X
9.9X
11.4X
HIT & Payer Services
1.3X
1.2X
8.4X
12.6X
Valuation multiples across the
healthcare sector remain strong.
The HIT and CRO sectors receive
the most significant valuation
premiums over the rest of the
market.
HIT INDEX PERFORMANCE DETAIL – AS OF JUNE 30, 2020
INDEX VALUATION MULTIPLES
Copyright© 2020 Healthcare Growth Partners
HEALTHCARE CAPITAL MARKETS
21
6
Despite the immense turbulence and uncertainty experienced in 1H 2020, the surge in Health IT IPOs
that started in 2019 continued into 2020. In the past 12 months, 9 HIT companies have gone public,
with an additional 3 gearing up to hit the market. This new class performed well in 1H 2020, led by
Schrodinger (up 439%), Livongo (up 200%), Peloton (up 103%), and One Medical (up 159%) which
have been able to capitalize on COVID-19 trends.
• Direct primary-care provider One Medical made its public debut on January 31, selling 17.5 million
shares at $14 per share. Shares jumped 60% on the first day of trading, valuing the company at
$2.7 billion. One Medical’s focus on transforming primary care with a mix of digital and in-office
care has led to a surge in revenue amidst the pandemic, and the company ended the Q2 up 149%.
• Drug discovery software company Schrödinger raised $232 million in its February 6th IPO. The
Company sold 13.6 million shares of common stock at $17 per share, which surged to $27.22 on
the first day of trading and was up 439% at the end of Q2.
• Health benefits platform Accolade filed for its IPO in late February and made its debut on July 2nd,
offering 10 million shares of its common stock at $22 per share, valuing the company at $1.2
billion. The Company says the COVID-19 pandemic has increased the need for its technologies and
was well received in the market which opened trading at $35, nearly 60% higher than its IPO price.
• Amid surging demand for telehealth, telehealth giant Amwell confidentially filed for IPO in early
June. The Company raised $194 million in a Series C round in May and has reported a 4,000%
uptick in patient visit volume in recent months.
• GoHealth, a medicare-focused health insurance marketplace, raised $914 million in its July 15th
IPO of 42.5 million shares priced at $21. Despite the upsized offering above the initially stated
range, GoHealth shares dipped on their first day of trading to $19/ share. The IPO values the
company at $6.7 billion.
HEALTH IT IPOS
Copyright© 2020 Healthcare Growth Partners
-100%
-50%
0%
50%
100%
150%
200%
250%
Day 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100Change Healthcare
Health Catalyst
Livongo
Phreesia
SmileDirectClub
Peloton
Progyny
One Medical
Schrödinger
FIRST 100 DAY PERFORMANCE
HEALTHCARE CAPITAL MARKETS
22
6
As discussed previously, HGP tracks six indices across the health IT and services sectors.
The
components of each index are listed below. Each index is based on an equal-weighted portfolio.
Sector Components
Health IT (HIT) – Constituents
Allscripts – NAS:MDRX
Benefitfocus – NAS:BNFT
Care.com – NYS:CRCM [Acquired 2/11/2020]
Castlight Health – NYS:CSLT
Cerner – NAS:CERN
Change Healthcare – NAS:CHNG
Computer Programs & Systems – NAS:CPSI
ehealth – NAS:EHTH
Evolent Health – NYS:EVH
Fitbit – NYS:FIT
Health Catalyst – NAS:HCAT
HealthEquity – NAS:HQY
HealthStream – NAS:HSTM
Hms Holdings – NAS:HMSY
Inovalon Holdings – NAS:INOV
Invitae – NYS:NVTA
IQVIA – NYS:IQV
iRhythm Technologies – NAS:IRTC
Livongo – NAS:LVGO
Model N – NYS:MODN
NantHealth – NAS:NH
NextGen – NAS:NXGN
NRC Health – NAS:NRC
Omnicell – NAS:OMCL
One Medical – NAS:ONEM
Peloton – NAS:PTON
Phreesia – NYS:PHR
Premier – NAS:PINC
Progyny – NAS:PGNY
Roper Technologies – NYS:ROP
Simulations Plus – NAS:SLP
SmileDirectClub – NAS:SDC
Streamline Health Solutions – NAS:STRM
Tabula Rasa Healthcare – NAS:TRHC
Teladoc – NYS:TDOC
Veeva Systems – NYS:VEEV
Vocera Communications – NYS:VCRA
PBMs – Constituents
CVS Health – NYS:CVS
Rite Aid – NYS:RAD
Walgreens Boots Alliance – NAS:WBA
HIT & Payer Services – Constituents
Accenture – NYS:ACN
CACI International – NYS:CACI
CBIZ – NYS:CBZ
Conduent – NYS:CNDT
Corvel – NAS:CRVL
DXC Technology – NYS:DXC
Huron Consulting Group – NAS:HURN
Kforce – NAS:KFRC
Magellan Health – NAS:MGLN
Tivity Health – NAS:TVTY
Healthcare Services – Constituents
Amedisys – NAS:AMED
Brookdale Senior Living – NYS:BKD
Community Health Systems – NYS:CYH
Encompass Health Corp – NYS:EHC
HCA Management Services – NYS:HCA
Laboratory Corporation of America Holdings – NYS:LH
Mednax – NYS:MD
Quest Diagnostics – NYS:DGX
Select Medical Holdings – NYS:SEM
Tenet Healthcare – NYS:THC
Universal Health Services – NYS:UHS
CROs – Constituents
Charles River Laboratories International – NYS:CRL
Icon – NAS:ICLR
IQVIA – NYS:IQV
Pharmaceutical Product Development – NAS:PPD
PRA Health Sciences – NAS:PRAH
Schrodinger – NAS:SDGR
Syneos Health – NAS:SYNH
Payers – Constituents
Anthem – NYS:ANTM
Centene – NYS:CNC
Cigna – NYS:CI
Humana – NYS:HUM
Molina Healthcare – NYS:MOH
UnitedHealth Group – NYS:UNH
WellCare – NYS:WCG [Acquired 1/23/2020]
Copyright© 2020 Healthcare Growth Partners
23
MACROECONOMICS
7
2020 started with a bang and has proven within only the first six months to already be a year of
immense global impact. The year began with the killing of Qasem Soleimani on January 3rd, leading to
weeks of tension between the United States and Iran. Almost immediately afterward, the impeachment
trial of President Trump began, causing the world to listen as the United States debated the Constitution
and Presidential powers. Almost as soon as Trump was acquitted on February 5th, an even greater
global threat began to make headlines – COVID-19 was beginning its spread outside of China despite
efforts to contain it. COVID-19 quickly changed the global economic landscape in ways unprecedented
for generations as countries around the world were forced to shutdown non-essential business activities
to slow the spread of the disease.
While COVID-19 made headlines due to its economic impact and threat to public health, another
paradigm-shifting movement gained global attention after the deaths of Ahmed Arbery and George
Floyd initiated worldwide protests calling for justice and police reform. While the Black Lives Matter
movement had been growing for nearly a decade since the acquittal in 2013 of George Zimmerman in
the fatal shooting of Trayvon Martin, the videos of George Floyd’s death in broad daylight while in the
custody of the Minneapolis Police Department provided an unequivocal event to rally around. It is only
against this background of pandemic spread of COVID-19 and global civil rights activism that we can
assess the 2020 macroeconomic landscape.
The first quarter of 2020 saw the end of a decade-long bull run with the emergence of COVID-19. After
reaching a record high in February, the S&P 500 plunged 34% within just a month before finally reaching
a bottom on March 23rd. Unemployment in the United States also skyrocketed to a reported high of
14.7% in April as tens of millions of jobs were lost within only a handful of weeks. Even this staggering
reported unemployment rate is widely considered to understate the full extent of jobs lost as a result of
COVID-19, with the true rate of unemployment estimated to be between 20% and 30% after accounting
for those unemployed workers that were misclassified as “temporarily unemployed”, that are now
underemployed, or that have decided to leave the labor force as a result of the lack of available jobs.
Since April, the unemployment rate has fallen, but it will likely take years for the labor market to recover
fully.
Copyright© 2020 Healthcare Growth Partners
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
U-3 (official)
U-6 (including underemployed and discouraged workers)
UNEMPLOYMENT RATE
MACROECONOMICS
24
7
Copyright© 2020 Healthcare Growth Partners
The equity markets rebounded in Q2 to post the biggest quarterly gain since 1998, with the S&P 500
rising 20 percent and regaining nearly all the ground lost during the first quarter. This meteoric rise is
particularly remarkable in the context of the continuing elevated worry and uncertainty associated with
the COVID-19 pandemic.
Most companies have ceased to provide earnings guidance, citing
uncertainties of the pandemic and how consumer demand will be affected. One of the clearest
illustrations of uncertainty is the variability of forecasts for the second half of the year. Analysts at
Goldman Sachs, for instance, have indicated that during the second half of 2020 the S&P 500 could
either gain 14% in a “vaccine upside” scenario or lose 30% in a “virus downside” scenario, with their
baseline forecast hovering somewhere around a 5% gain. At the moment, it’s truly anyone’s guess how
and when the economy will be able to return to something resembling normal.
IPOs over the first six months of 2020 followed a similar pattern to that of the stock market. The
months leading up to COVID-19 saw steady IPO and transaction volume as the mature bull market
continued from 2019. During the initial shock of COVID-19 and the broad shutdown of the US economy,
IPOs slowed considerably while companies waited for market volatility to subside. After the United
States began a phased reopening in May, transactions and IPOs resumed at a relatively normal pace in
June amid renewed investor confidence. In total, the US saw 93 IPOs which raised $32 billion during the
first half of 2020.
Private equity and venture capital velocity slowed but did not stop as a result of the recession during the
first half of the year. According to data from PitchBook and NVCA’s Venture Monitor, venture capital
deal activity slowed in the second quarter to $34.3 billion across 2,197 deals, a 23% decline in the
number of deals compared to the first quarter of 2020 and a 29% decline in the number of deals
compared to the second quarter of 2019. Private Equity activity slowed even more drastically in the
second quarter to an estimated $144 billion of deal value across 783 deals, a decline of 42% in the
number of deals compared to the second quarter of 2019. Similarly, global M&A deals plummeted 55%
YoY to $485.3 billion in Q2, its lowest level since Q3 2009, based on 8,272 deals, the lowest quarterly
total since Q3 2004, according to Refinitiv data. Notably, the drop in M&A activity was the most
dramatic in the U.S., sinking 85% YoY to $94.3 billion.
As we enter the second half of 2020, the markets appear to be cautiously optimistic about the future,
but that optimism is tempered by continued high unemployment and concern over COVID-19.
1H-2020 US STOCK MARKET PERFORMANCE
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
12/31/19
3/31/20
6/30/20
DJIA
S&P 500
Nasdaq
25
HEALTH IT HEADLINES
8
Notable headlines from 1H 2020 are outlined in the following pages on a quarterly basis. The
headlines in 1H 2020 illustrate the significant influence that policy and regulatory intervention has on
the incentives that dictate health IT investment and innovation trends, the increasing vertical
integration across healthcare, and the expanding presence of non-traditional companies in the health
IT market.
Q1 HEADLINES
Snohomish County man is first U.S. case of new coronavirus
January 21: The first case of Wuhan Coronavirus reported in the United States is a Snohomish County
man in his 30s who traveled to China., federal and local officials announced January 21st. At the time,
there were 440 cases reported worldwide Tuesday, and the U.S. joined a growing list of places
outside mainland China reporting cases, following Thailand, Japan, South Korea and Taiwan.
Epic ramps up campaign against HHS interop rules
January 24: Epic CEO Judy Faulkner escalated her campaign against HHS' data sharing rules, triggering
backlash from patients and advocates who say she's trying to protect the Wisconsin company's
business interests at patients' expense. She argued that the rules don't provide privacy protections
for patients, and that once patients send the data into unregulated apps that might sell or exploit it,
it's impossible to get it back.
Practice Fusion to pay $145 million to resolve criminal and civil investigations
January 27: As part of the criminal resolution, Practice Fusion admits that it solicited and received
kickbacks from a major opioid company in exchange for utilizing its EHR software to influence
physician prescribing of opioid pain medications.
Google-Backed One Medical surges 58% in trading debut
February 1: 1Life Healthcare Inc., a provider of tech-driven primary care clinics under the One
Medical brand, closed its first day of trading up 58% after raising $245 million in an initial public
offering. The shares closed Friday at $22.07, giving the company a value of $2.7 billion. The company
priced them Thursday at the bottom of the $14 to $16 target range.
UnitedHealth stock suffers worst day in nearly 9 years as Sanders’ Nevada win stokes investor fear
February 25: Shares of UnitedHealth plunged toward their worst day in nearly 9 years, declining 7.8%,
as the narrative around a potential Bernie Sanders nomination may have swung to negative from
positive following the senator’s surprisingly big win in Nevada.
Shares of Centene Corp,which
provides programs and services to government-sponsored health-care programs, plunged 9.4%.
U.S. stocks tumble 11% in worst week since 2008 crisis
February 28: The spread of the coronavirus rattled global financial markets, sending U.S. stocks to
their worst week since the financial crisis more than a decade ago. The S&P 500 plunged 11% in the
five days. Treasuries surged, pushing yields on the 10- and 30-year notes to record lows during the
period. Oil plunged toward $45 a barrel in its biggest weekly rout since 2008.
Copyright© 2020 Healthcare Growth Partners
HEALTH IT HEADLINES
26
8
Q2 HEADLINES
HIMSS cancels conference due to coronavirus
March 5: HIMSS has canceled its annual health information and technology conference in the wake of
the COVID-19 outbreak. It marks the first time in 58 years that the event has been canceled.
President Donald Trump had been scheduled to speak on March 9, marking the first time a sitting
president would have given remarks at the event and leading some to predict HHS planned to release
final versions of long-awaited information-blocking and interoperability rules at HIMSS20.
HHS releases final interoperability, data blocking regulations
March 9: The Trump administration released widely anticipated rules that change how providers,
insurers and patients exchange health data. The regulations will allow patients to access and
download their health records with third-party apps. Putting patients in charge of their health records
is a key piece of giving patients more control in healthcare, and patient control is at the center of the
Trump administration’s work toward a value-based healthcare system, Trump officials said.
CMS lays out regulatory relief for value-based care programs amid COVID-19 pandemic
March 22: The Trump administration has extended the deadlines for quality reporting and
applications for providers in value-based care programs. CMS released relief for regulatory
requirements as providers face the growing tide of COVID-19 patients. CMS also announced it will not
use any quality data on services from Jan. 1 through June 30 in the agency’s calculations for quality
reporting and value-based purchasing programs.
OCR will ease restrictions on telehealth tech during COVID-19
March 17: The Office for Civil Rights (OCR) announced, effective immediately, that it will exercise its
enforcement discretion and will waive potential penalties for HIPAA violations against health care
providers that serve patients through everyday communications technologies during the COVID-19
nationwide public health emergency. This exercise of discretion applies to widely available
communications apps, such as FaceTime or Skype, when used in good faith for any telehealth
treatment or diagnostic purpose, regardless of whether the telehealth service is directly related to
COVID-19.
Apple and Google partner on COVID-19 contact tracing technology
April 10: Across the world, governments and health authorities are working together to find solutions
to the COVID-19 pandemic, to protect people and get society back up and running. Software
developers are contributing by crafting technical tools to help combat the virus and save lives. In this
spirit of collaboration, Google and Apple are announcing a joint effort to enable the use of Bluetooth
technology to help governments and health agencies reduce the spread of the virus, with user
privacy and security central to the design.
CMS issues recommendations to re-open health care systems in areas with low incidence of CV-19
April 19: As the US continues to face the unprecedented public health emergency from the COVID-19
pandemic, the tide is turning and some areas throughout the country are seeing a decline in cases. As
states and localities begin to stabilize, the Centers for Medicare & Medicaid Services (CMS) is issuing
guidance on providing essential non-COVID-19 care to patients without symptoms of COVID-19 in
regions with low and stable incidence of COVID-19. This is part of Phase 1 in the Trump
Administration’s Guidelines for Opening Up America Again.
Copyright© 2020 Healthcare Growth Partners
HEALTH IT HEADLINES
27
8
Hospitals ask Congress for another $100 billion COVID-19
May 1: In an odd twist to the pandemic, hospitals are actually struggling financially as beds that
would have been taken by non-COVID patients sit empty. Health care workers are bearing the brunt
of the distress, having their hours and pay cut.
As Trump pushes to reopen, government sees virus toll nearly doubling
May 4: The projections, based on data collected by various agencies, including the Centers for
Disease Control and Prevention, and laid out in an internal document obtained Monday by The New
York Times, forecast about 200,000 new cases each day by the end of May, up from about 30,000
cases now. There are currently about 1,750 deaths per day, the data shows.
The U.S. death toll has reached 100,000
May 27: One hundred thousand Americans dead in less than four months. The death toll from the
coronavirus passed that hard-to-fathom marker on May 27, which slipped by like so many other days
in this dark spring, one more spin of the Earth, one more headline in a numbing cascade of grim
news.
U.S. health agency reverses Obamacare transgender protections
June 12: The U.S. Department of Health and Human Services issued a rule that would lift anti-
discrimination protections under Obamacare for transgender people and women seeking abortions,
drawing condemnation from Democratic lawmakers. The rule reverses some provisions of the
Affordable Care Act passed during President Barack Obama’s administration, also known as
Obamacare, that extended civil rights protections in healthcare to cover areas including gender
identity and the termination of a pregnancy.
Hospitals lose lawsuit against HHS over price disclosure rule
June 23: Industry groups representing hospitals and health systems across the nation sued HHS last
year, challenging a rule that requires hospitals to disclose the rates they negotiate with insurers
beginning in 2021. On June 23, a federal judge granted HHS' motion for summary judgement.
Under a final rule issued in November, hospitals are required to disclose the standard charges,
including payer-specific negotiated rates, for all services beginning next year.
CMS creates new Office of Burden Reduction and Health Informatics
The CMS has formed the new Office of Burden Reduction and Health Informatics – an outgrowth of
its Patients over Paperwork Initiative, whose mission is eliminating red tape in healthcare
documentation and, officials say, "permanently embeds a culture of burden reduction across all
platforms of CMS agency operations.“ The new office is meant to bolster CMS's efforts to decrease
the hours and costs clinicians and providers incur for CMS-mandated compliance.
Copyright© 2020 Healthcare Growth Partners
28
ABOUT HEALTHCARE GROWTH PARTNERS
9
Healthcare Growth Partners (HGP) is an exceptionally experienced Investment Banking & Strategic
Advisory firm exclusively focused on the transformational Health IT market. We unlock value for our
clients through our Sell-Side Advisory, Buy-Side Advisory, Capital Advisory, and Pre-Transaction
Growth Strategy services, functioning as the exclusive investment banking advisor to over 100 health
IT transactions representing over $2 billion in value since 2007.
Our passion for healthcare inspires us to not only create value for our clients, but to also generate
broad, overarching improvements to the functionality and sustainability of health. With our focus, we
deliver knowledgeable, honest and customized guidance to select clients looking to execute high
value health IT, health information services, and digital health transactions.
CONTACT INFORMATION
Christopher McCord
Managing Director
chris@hgp.com
2001 Kirby Drive, Suite 814
Houston, TX 77019
(713) 955-7935
www.hgp.com
Securities offered through HGP Securities, LLC, member FINRA & SIPC, broker-dealer affiliate of Healthcare
Growth Partners, LLC.
Sources of Information:
CMS, CNBC, CNN, company press releases, company SEC filings, Dealogic, EY Global, FactSet,
FierceHealthcare, Forbes, FRED, Health Data Management, Healthcare Growth Partners database,
HealthLeaders Media, HIStalk, Mercom Capital Group, Modern Healthcare, PwC, SIFMA, The New York
Times, Mergermarket, NVCA, Pitchbook, Rock Health, StartUp Health, and The Wall Street Journal.
These statistics are presented for informational purposes only. While the information presented has been
obtained from sources deemed to be reliable, no representation or warranty, express or implied, is made as to
the accuracy or completeness of such information.
Copyright© 2020 Healthcare Growth Partners
29
HGP TRANSACTION EXPERIENCE
10
Copyright© 2020 Healthcare Growth Partners
HGP TRANSACTION EXPERIENCE
30
10
Copyright© 2020 Healthcare Growth Partners
HGP TRANSACTION EXPERIENCE
31
10
Copyright© 2020 Healthcare Growth Partners
32
APPENDIX A
Strategic M&A Highlights
11
Quarter
Acquiror
Seller
Seller Description
Deal Size
($mm)
Q1
CompuGroup
Medical
H&S Qualita
Provides solutions including patient management, disease and dosage
management, blood pressure level, spirometry and pulse oximetry which is
linked and can be viewed on a tablet, a laptop or a mobile.
na
Q1
ResMed
Snapworx
Software built on artificial intelligence that automates the outdated,
manual processing that slows down patient management.
na
Q1
Nestle Health
Sciences
LivingMatrix
Developer of a cloud-based application for Functional Medicine
Practitioners that streamlines and automates the paper intake process,
maps patient information into the Functional Medicine Timeline and Matrix
and makes tracking patients’ progress easy.
na
Q1
Healthgrades
eVariant
Provider of SaaS-based enterprise platform designed to modernize
physician alignment strategies with data analysis.
150
Q1
HCA Healthcare
Valify
Develops a Web-based solution that allows healthcare organizations to
identify, benchmark, and track savings in purchased services.
na
Q1
SCI Solutions
Tonic Solutions
Provider of a patient data collection and payments platform designed to
collect any information from any patient on any device.
na
Q1
Teladoc
InTouch Health
Provides comprehensive telemedicine solutions and expertise that enable
physicians to perform real-time consults with patients.
$600
Q1
R1
SCI Solutions
The company offers PATIENT REFERRALS, a solution to connect and expand
reach to referring providers, capture and grow outpatient volumes,
streamline operations, and increase revenues; and PATIENT SCHEDULING,
an access management healthcare scheduling solution.
$190
Q1
Global
Healthcare
Exchange
Lumere
Provider of data-driven technology platform intended to improve patient
care. The company's platform provides both physicians and hospital leaders
with evidence-based data, information, and analytics.
$135
Q1
Infor Global
Solutions
Intelligent Insites
Provides healthcare organizations with a single system capable of locating
patients, staff, equipment, and inventory via information derived through
various wireless locating technologies.
na
Q1
Evive
WiserTogether
Treatment-guidance tool that helps people find the right treatment.
na
Q1
Clarivate
Analytics
Decision
Resources Group
Provides analytics and consulting services to help vendors identify, assess
and forecast medical-device and drug utilization trends and market
opportunities.
$950
Q1
Hill-Rom
Excel Medical
The company aggregates data from physiological monitors, medical devices
and its surveillance tools enable caregivers to evaluate data from multiple
sources and track trends that might point to patient deterioration.
$19.2
Q1
Imprivata
GroundControl
Provider of automation software for managing mobile devices in modern
enterprises.
na
Q1
AMN
Healthcare
Services
Stratus Video
Provider of interpreting, video and telecommunication services designed to
change the way limited English proficiency patients communicate with
their healthcare providers.
$475
Q1
HealthMark
Otech
Provider of patient intake management software and systems.
na
Q1
CompuGroup
Medical
Cerner - Germany
& Spain Assets
The products include medico and Soarian Integrated Care, which are health
information systems in Germany; Selene, a leading health information
system for public hospitals in Spain; and Soarian Health Archive, a system
for digitizing and storing health information.
$248
Copyright© 2020 Healthcare Growth Partners
APPENDIX A – M&A HIGHLIGHTS
33
11
Quarter
Acquiror
Seller
Seller Description
Deal Size
($mm)
Q1
OnShift
Avesta Systems
The company's CandidateCare and AssociateCare applications streamline
the process of attracting, identifying and building a skilled workforce and
provide services such as background checks and drug screening, employee
engagement surveys as well as HR support and consulting.
na
Q1
Medtronic
Digital Surgery
A pioneer in surgical artificial intelligence (AI), data and analytics, and digital
education and training.
na
Q1
symplr
The Patient
Safety Company
Offers cloud-based solutions that provide healthcare event reporting,
incident management, audit process control, management of clinical
governance, performance management, and quality improvement
na
Q1
Health Catalyst
Able Health
Developer of a software platform for physician organizations designed to
manage value-based programs.
$27
Q1
ShareCare
Visualize Health
Developer of a population health and quality measure attainment platform
for medical providers to close gaps in patient care and maximize value-
based reimbursements.
na
Q1
Smith &
Nephew
MiJourney
Developer of a patient management software that enables coordination
across the entire episode of care by administrators, physicians, and patients.
na
Q1
CentralReach
Thread Learning
Provider of an educational platform intended to facilitate learning
management of autism students.
na
Q1
Navihealth
Innovative
Healthcare
Delivery
Specializes in identifying and addressing social determinants of health in
order to improve quality of life and clinical outcomes for patients.
na
Q1
Roche
Diagnostics
OBI Medical
Developer of a software intended to accurately measure gas values in the
bloodstream.
na
Q1
Mitchell
International
Coventry
Workers Comp
Services
Provider of compensation cost and care management services intended to
enhance network development, clinical integration and operational
efficiencies at the client desktop.
na
Q1
RevSpring
Loyale
Healthcare
Provides solutions to develop financial relationships between providers and
their patients through financing options, balance notification, online
payment options, and secure digital communications..
na
Q1
Ginger
LiveBetter
App for better mental health and well-being.
na
Q1
HealthStream
NurseGrid
Developer of staffing, communication and schedule management tools
designed to modernize staffing processes for nurses.
$21.4
Q1 WebMD Health
Corp.
StayWell
Company
Provider of patient education and population health management services.
The company focuses on health engagement though health information and
education programs.
na
Q1
Press Ganey
Associates
NarrativeDx
The company's platform uses natural language processing and machine
learning to collect, analyze and visualize unstructured patient feedback from
internal and external sources and automatically highlight key areas for
improvement and provide specific recommendations.
na
Q1
Fresenius
Medical Care
North America
DGG
Developer of digital and scalable disease management programs for patients
with chronic diseases. The company is engaged in developing disease
management software for health insurance providers and global
pharmaceutical companies.
na
Q1
Thomson
Reuters
Corporation
Pondera
Solutions
Provider of fraud detection as a service intended to combat fraud, waste
and abuse in large government programs and health systems.
na
Q1
Valsoft
MacPractice
Developer of a practice management and clinical software built for doctors
who use macs.
na
Q2
Integrichain
Incorporated
Cumberland Life
Sciences
Life Sciences Division specializes in advisory services, business process
outsourcing, analytics solutions and systems implementation around
contracts, pricing and compliance for pharma manufacturers of all sizes..
na
Copyright© 2020 Healthcare Growth Partners
APPENDIX A – M&A HIGHLIGHTS
34
11
Quarter
Acquiror
Seller
Seller Description
Deal Size
($mm)
Q2
UnitedHealth
Group
AbleTo
Provider of technology-enabled behavioral health care platform designed to
integrate behavioral and medical health care.
$470
Q2
Change
Healthcare
eRx Network
Provider of comprehensive, innovative, and secure data-driven claims
processing solutions for pharmacies.
$212.9
Q2
Kaufman Hall
Change
Healthcare -
Connected
Analytics
Business
Provider of enterprise performance management (EPM) software, data, and
management consulting services.
$55
Q2
Optum
NaviHealth
Provides post-acute care support solutions, including Advantage Navigator,
which helps Medicare Advantage plans to manage their post-acute care
spending, Post-Acute Compass, which helps hospitals for developing and
managing a network of providers to better assess and manage patients
following hospital discharge, and SeniorMetrix that provides a suite of
functional assessment and clinical decision-support technology
$2,950
Q2
ArchiMed
Actigraph
Developer of physical activity and sleep or wake monitoring device designed
to facilitate users to configure and initiate data collection from a mobile
device.
na
Q2
Omada
Physera
The company's health tracking mobile application provides guided exercises,
track progress and connect with a therapist, enabling users to seamlessly
recover from injuries and get fit again.
$30
Q2 Ontario Systems
SwervePay
Provides cloud-based payment and customer service solutions to pay
medical bills via text.
na
Q2
Change
Healthcare
PDX
Provider of pharmacy management software and services intended to offer
innovative and patient care, medical accounting services and reporting tools
for operational management.
$208
Q2
R1
Cerner RevWorks
Cerner RevWorks consists of an array of revenue cycle management (RCM)
services ranging from discrete services related to claims processing and
denial management for both physician practices and health systems to
larger outsourcing agreements.
$30
Q2
Walmart
CareZone
Prescription
Management
Tech
CareZone’s prescription management technology and related patents.
na
Q2
Cedar Gate
Technologies
Citra Health
Solutions
The company engages in delivering comprehensive, technology-powered,
people-driven applications which aggregates clinical, financial, and patient
data from multiple sources to create a holistic perspective of a provider's
panel and individual patient touch points within the healthcare system,
enabling clients to strategically expand market opportunity, diversify
revenue streams and reduce the cost of care.
na
Q2
Syntellis
Kaufman Hall &
Associates –
Software
Diivision
Provides financial and capital advisory services to the healthcare sector.
na
Q2
Lululemon
Mirror
Developer of a connected fitness platform designed to bring the essential
components of a great studio workout in-home.
$500
Copyright© 2020 Healthcare Growth Partners
35
APPENDIX B
Financial Sponsor Buyout Highlights
12
Quarter
Acquiror
Seller
Seller Description
Deal Size
($mm)
Q1
ABRY Partners
Centauri Health
Solutions
Developer of cloud-based data management software solution designed
to create custom solutions for health plans and hospitals, optimizing
government-sponsored healthcare reimbursement for the care and
coverage provided to health plan members and hospital patients.
na
Q1
HGCapital
Intelerad Medical
Systems
Provider of medical images, workflow and data management software.
The company's software specializes in medical imaging, distributed
radiology services, distributed architecture and workflow orchestration,
radiology and workflow modules.
$849.5
Q1
Ridgemont
Equity Partners
Healthmark
Provider of health information management services for medical clinics
and hospitals. The company's services involve the release of information
process creating a patient-centric experience with advanced
management and technology services.
na
Q1
Astorg
eResearch
Technology
Provider of health outcomes research services to biopharma sponsors
and contract research organizations.
na
Q1
Windjammer
Capital
Compex Legal
Services
Provider of litigation support services to the legal and insurance
communities designed to help clients to meet their minority purchasing
goals.
na
Q1
Arsenal Capital
Partners
BresMed Health
Solutions
Provider of health economics and outcomes research consultancy
service based in Sheffield, England.
na
Q1
SymphonyAI
Group
TeraRecon
Developer of 3D medical image processing systems intended to provide
solutions that impact clinical care across health systems.
na
Q1
Francisco
Partners
Smith Technologies
Provider of software suite for community and long-term care (LTC)
pharmacies, local government agencies, and utility districts.
na
Q1
Record
Reproduction
Services, Graue
Mill, TPE
Boulder, Iron
Creek, Milk
Street, Search
Fund Partners
Quest HIMS
Provider of medical record retrieval and medical record disclosure
management services for hospitals and medical groups based in Illinois,
United States. The company specializes in quality review, delivery
method verification, invoicing, delivery, and collection services for
healthcare organizations.
na
Q1
SunMed Advisors
Connextyx
Technologies
The company provides unique products for the healthcare market
including MedFlash, the electronic Personal Health Manager (ePHM),
Medical Alert US, a Personal Emergency Response Services (PERS)
product and Medical Transcription, Disease Management, Revenue
Cycle Management and Medical Consulting - Billing.
na
Q1
Genstar Capital
ConnectiveRx
Provider of patient prescription medication assistance and payment
reimbursement services.
na
Q1
The Blackstone
Group
HealthEdge
Software
Provider of next-generation claims and benefit administration, business
intelligence and portal software products for healthcare payors.
$730
Q1
Parthenon
Capital Partners
RxSense
Provider of pharmacy benefit management services, health savings
programs, and pharmacy technology services throughout the United
States.
na
Q1
Marlin Equity
Partners
SmartLinx Solutions
Developer of end-to-end workforce management and human capital
management software.
na
Q1
Main Capital
Partners
Alfa Kommun &
Landsting
The company's broad offering includes both complete information
systems and niche products, such as solutions for journaling, electronic
prescription, medication management and care planning.
na
Copyright© 2020 Healthcare Growth Partners
APPENDIX B – BUYOUT HIGHLIGHTS
36
12
Quarter
Acquiror
Seller
Seller Description
Deal Size
($mm)
Q2
Verdane Capital
Conscriptor
Developer of medical journal documentation services and dictation
software based in Henan, Sweden. The company offers journal writing,
Medspeech hybrid dictation and dictation analysis to hospitals, clinics and
public primary care facilities.
na
Q2
Glide Buy Out
Partners
Corilus
Offers practice management systems, communication tools, electronic
patient records, data exchange and billing systems.
na
Q2
Summit Partners,
TPG Capital,
Silversmith
Capital Partners
Lifestance
Provider of behavioral healthcare and evidence-based treatment services.
The company offers psychiatry and medication management,
psychological testing and evaluation, Intensive Outpatient Programs
(IOPs) as well as child and adolescent services to patients suffering from
addiction, substance abuse and eating disorders.
$1,200
Q2
Nautic Partners
ProHealth Medical
ProHealth Medical, Inc. enables health systems to service its home
infusion patients rather than sending them to outside providers. The
service generates a new revenue source from existing patients and
resources in the rapidly-growing area of infusion services.
na
Q2
Nautic Partners
Bioplus
The company's service specialize at providing comprehensive benefit
investigations, financial and co-pay assistance, drug list review, outcome
reports for REMs and LDD reporting, timely patient status update,
financial savings and therapeutic outcomes and patient status reports,
enabling patients to enjoy 24/7 access to pharmacists.
na
Q2
Rubicon Venture
Partners
Central Logic
Leading provider of transfer center and on-call scheduling technology
solutions for healthcare systems.
$100
Q2
Sunstone
Partners
Med Tech Solutions
The company offers all-encompassing healthcare IT installation,
deployment and maintenance from in-office devices to cloud-based
applications, assess, implement and maintain compliant environments to
meet healthcare regulations.
na
Q2
Fusion Capital
Kalos
The company provides pharmacy software programs and hardware
systems that are used in a variety of settings such as retail pharmacies,
universities, and correctional facilities, and also engages in custom
designing and printing of promotional products and corporate apparel.
na
Q2
LLR Partners
TrueLearn
Provider of test preparation software for medical examinations. The
company's platform enables medicine students in preparing with SaaS-
based outcome-driven exam preparation techniques while making the
learning process fun, impactful and permanent.
na
Q2
Trinity Hunt
Partners
Juris Medicus
Provider of medical expert sourcing and case management services. The
company offers a team of professionals with extensive experience as
paralegals, legal assistants, litigation clerks, nurses, and medical records
specialists to make the medical expert process as efficient and effective
as possible for all involved.
na
Q2
Lightyear Capital
HealthPlanOne
Provider of an online marketplace for health insurance. The company
engages in offering health insurance sales and distribution through its
digital marketing, proprietary technology and call center operations,
enabling health insurance carrier and broker customers to research and
select health insurance plans in an efficient and compliant manner.
na
Q2
Nordic
Healthcare
Group
Health Innovation
Institute
Provider of health and social services and analytics intended to build a
better social and healthcare system. The company specializes in health
innovation, health IT, and medical equipment and governance in
healthcare, delivering clients with a high-quality product or service in an
efficient manner.
na
Copyright© 2020 Healthcare Growth Partners
37
APPENDIX C
Private Equity Highlights (non-buyout)
13
Quarter
Acquiror
Seller
Seller Description
Deal Size
($mm)
Q1
Accel Partners, Index
Ventures, Teachers Innovation
Platform, Creandum
KRY
Provider of an application designed to provide video consultation
to doctors.
$155.8
Q1
Khosla Ventures, Magnetic
Ventures, Amplitude
Ventures, True Ventures,
Future Ventures
Deep
Genomics
Develops a machine learning technology to understand how
genetic variations lead to diseases
$40
Q1
L Catterton, Temasek
Holdings, Apax Partners
ClassPass
Offers an online subscription service that provides access to
fitness classes.
$285
Q1
Mayo Clinic, NTT Venture
Capital
Nference
Developer of an artificial intelligence powered life sciences
software platform designed to synthesize the exponentially
growing biomedical knowledge.
$60
Q1
Venrock, Fidelity
Management and Research
Company, JS Capital, Foresite
Capital Management
Element
Biosciences
Element Biosciences is a multi-disciplinary startup focused on
innovating genetic analysis tools for the research and diagnostic
markets.
$80.3
Q1
Prism VentureWorks, Insight
Venture Partners
Covera Health
Provider of analytics-based programs intended to reduce medical
misdiagnoses and improve quality of care. The company's
services include analyzing clinical datasets in unique ways to drive
the emerging science of quality.
$23.5
Q1
Smile Group, Cormorant Asset
Management, Senvest, Janus
Henderson Group, Quadrant
Capital, Abbott Ventures
Bigfoot
Biomedical
Developer of an end-to-end Type 1 diabetes management system
using simple design, cloud connectivity, and human centered
automation.
$55
Q1
Oak HC/FT Partners, GV
CareBridge
The company's technology provides services such as electronic
visit verification, data aggregation, 24/7 member support and
benefit management.
$40
Q1
Orix Growth Capital
drchrono
Provides Web and mobile based electronic health record (EHR)
solutions
$20
Q1
AllianceBernstein PCI,
Declaration Partners,
SymphonyAI Group, Maverick
Ventures
Concerto
HealthAI
Provider of a multifaceted oncology research platform intended
to design and deliver care based oncology research and data
analytics.
$150
Q1
TPG Sixth Street Partners
Medsphere
Systems
Provider of an open-source electronic health-record system
intended to offer inspired IT systems for every healthcare
provider.
$40
Q1
T. Rowe Price, Viking Global
Investors
Color
Genomics
Personalized genomics startup. The Color Test is physician-
ordered and comes with complimentary board-certified genetic
counseling for clients and healthcare providers.
$75
Q1
Kleiner Perkins Caufield &
Byers, The Founders Fund,
Afore Capital
Modern
Health
Developer of a health benefits platform intended to help
companies care for their employees' emotional well-being. The
company's platform helps companies increase employee
productivity and reduce turnover as well as dives into the data to
provide actionable insights.
$31
Q1
Bessemer Venture, Lead Edge,
Insight Partners, Atomico
Investments, 11.2 Capital,
Quadrille Capital, Heuristic
Hinge Health
Designs and develops healthcare solutions for employees to
recover from musculoskeletal disorders at workplace.
$90
Copyright© 2020 Healthcare Growth Partners
APPENDIX C – INVESTMENT HIGHLIGHTS
38
13
Quarter
Acquiror
Seller
Seller Description
Deal Size
($mm)
Q1
GV, Bain Capital, Casdin
Capital, Define Ventures
Verana Health
Provider of a data insights platform intended to accelerate
healthcare innovation and optimize drug and device
development.
$100
Q1
Flare Capital, Devonshire
Investors, Cox Enterprises, F-
Prime, Temasek Holdings,
Polaris Partners, Khosla
Ventures, .406 Ventures
Iora Health
Provider of primary health care services intended to deliver high
impact, relationship-based care. The company offers a team-
based approach with a doctor or nurse practitioner, nurse,
behavioral health specialist and health coach for each patient.
$126
Q1
Blisce, Advancit Capital, Times
Bridge, Waverley Capital,
Spectrum Equity, The Chernin
Group
Headspace
Provides online meditation products and services
$93
Q1
Icon Ventures, Individual
Investors
Maven Clinic
Provides a telemedicine platform for women.
$45
Q1
Endeavour Vision SA, Kaiser
Permanente Ventures,
Generator Ventures
IntelyCare
Provider of an on-demand nurse staffing application designed to
assist hospitals and clinics in hiring nursing and healthcare staff.
$45
Q1
GV, Deerfield Management,
Qiming Venture Partners, The
Invus Group, Third Rock
Ventures, Cormorant Asset
Management
Element
Science
The company's device uses a patch-based Wearable Cardioverter
Defibrillator (WCD) that monitors a patient's heart, providing
medical practitioners with a tool to address leading causes of
death and hospitalization in patients with heart disease, primarily
as they transition from the hospital-to-home.
$145.6
Q1
Durable Capital Partners, T.
Rowe Price, Fidelity
Management and Research
Company
Alignment
Healthcare
Provides new model for health care delivery that cuts costs and
improves lives by unraveling the inefficiencies of the current
system to drive patients, providers and payers toward a common
goal of wellness.
$135
Q1
Declaration Partners,
Redesign Health, Tiger Global
Management, The Carlyle
Group
Vault Health
Provider of healthcare services intended for males. The company
offers identification and treatment services for men with low
testosterone levels to members by providing safe patient
treatments and quality care.
$30
Q1
Sandbox Industries, BlueCross
BlueShield Venture Partners
eMids
Technologies
The company's business process outsourcing services offer
business intelligence, analytics, package implementation,
application development and maintenance, product engineering
and independent verification for different healthcare functions.
na
Q1
IVP, Tenaya, Greylock
Partners, Glynn Capital,
Meritech Capital, Venrock,
Casdin, Crown Ventures,
Providence Ventures
Lyra Health
Provides analytics and screening tools to identify people who can
benefit from behavioral health care
$75
Q1
Allianz X, Takeda Ventures, SV
Health Investors
Amwell
Operates as a telehealth services company. Operates an online
marketplace that offers software, services, and access to clinical
services.
$194
Q1
New Enterprise Associates,
Novo Holdings, Franklin
Templeton Investments
Tempus
Develops a software platform that uses data to provide doctors
information about treatment options for individual patients,
showing how other patients with similar genetic profiles have
responded to particular therapies.
$100
Q1
McGovern Capital, Temasek,
Unilever Ventures, Ascent
Equity Group, Epiq Capital,
GableHorn Investments,
Satyadharma Investments,
Chiratae Ventures
CureFit
Developer of a fitness based online platform created to address
preventative healthcare techniques.
$113
Copyright© 2020 Healthcare Growth Partners
APPENDIX C – INVESTMENT HIGHLIGHTS
39
13
Quarter
Acquiror
Seller
Seller Description
Deal Size
($mm)
Q1
General Catalyst Partners
Olive
An identity management system that creates patient ID for
verification in hospitals.
$51
Q1
Avalon Ventures, The CU
Healthcare Innovation Fund,
MemorialCare Innovation
Fund, Cigna Ventures,
Stanford Hospital & Clinics
AristaMD
Digital health company that provides a platform for electronic
consults and referrals.
$18
Q1
Mosaik Partners
PatientPay
Develops paperless billing and electronic patient payment
processing solutions.
$6.2
Q1
New Capital Partners
TeleHealth
Solution
The business provides virtual medical and healthcare support for
patients in hospitals and senior living facilities.
na
Q2
Council Capital
Physician
Housecalls
The company is a Medicare enrolled primary clinic providing
chronic care management, care plan oversight, transition
management services, wellness visits and behavioral health
integration services to patients in post-acute facilities.
$12.3
Q2
Goldman Sachs
98point6
Operator of a healthcare platform intended to receive
personalized chat-based consultation from board-certified
physicians.
$43
Q2
Echo Health Ventures, Teuza
Management and
Development, Olive Tree
Capital, Qualcomm, Insight V,
OrbiMed, Qure Ventures
Tyto Care
The company's device seamlessly connects people to clinicians
and offers a hand-held modular examination tool and a
telehealth platform, enabling healthcare professionals to provide
the best remote home examination and diagnosis solutions.
$50
Q2
Barings, M&G Investments
Tunstall
Group
The company's telecare systems combine a range of unobtrusive
alarms and sensors which detect smoke and gas as well as a
person falling, alerting the monitoring center for emergency
assistance.
na
Q2
meritec, California Medical
Association, Echo Health
Ventures, OMERS Private
Equity, GV
Aledade
Offers services to primary care physicians to form accountable
care organizations. This allows doctors to stay independent,
practice medicine like they've always wanted to, and thrive
financially by keeping people healthy.
$64
Q2
Index Ventures, Temasek
Holdings
Alan (Life and
Health
Insurance)
Provider of an online digital insurance platform designed to
provide health insurances. The company's platform offers simple,
seamless coverage with reimbursements, enabling users to get
more details about their coverage easily.
$54.5
Q2
GSR Ventures, Pharmaceutical
Product Development
Medable
The company offers an end-to-end, cloud-based platform with a
flexible suite of tools for clinical trials and transforms clinical care
and research by enabling direct to patient (D2P) healthcare,
providing medical practitioners with more efficient clinical
research, effective healthcare delivery and accurate precision and
predictive medicine.
$41.8
Q2
Longitude Capital, Euclidean
Capital, Frazier Healthcare
Ventures
Dascena
The company's technology utilizes machine learning and
intensive clinical research leading to a suite of AlgoDiagnostics for
predicting acute decompensation, sepsis and acute kidney injury,
helping patients per year to make early, accurate, and often life-
saving interventions.
$50
Q2
Newlight Capital Partners
Zing Health
Physician-led Medicare Advantage HMO plan designed for
Medicare-eligible beneficiaries.
$150
Q2
Perceptive Advisors
Omada
Health
Provides group-based programs for chronic disease prevention. It
helps employers and health plans to identify the people within
their population at risk for developing preventable chronic
conditions, such as type 2 diabetes or heart diseases; and
engages participants to lose weight.
$57
Copyright© 2020 Healthcare Growth Partners
APPENDIX C – INVESTMENT HIGHLIGHTS
40
13
Quarter
Acquiror
Seller
Seller Description
Deal Size
($mm)
Q2
8VC, Optum Ventures,
Foresite Capital, General
Catalyst, What If Ventures,
Arch Venture Partners
Mindstrong
Health
Designs and develops a system for assessment of cognitive
function based on mobile device usage.
$100
Q2
Alexandria Venture, Two
Sigma, Third Rock Ventures,
GV, Foresite Capital, Arch
Venture, Canada Pension Plan,
Andreessen Horowitz
Insitro
Operator of a data-driven drug discovery and development
company that uses machine learning and high-throughput
biology to transform the way that drugs are discovered and
delivered to patients.
$143
Q2
Bain Capital
Kalderos
The company's platform offers data management, provides clear
and customizable views into the data available in the cloud with
immediate access to data and targeted insights as well as offers
claims verification, dispute resolution and discount monitoring.
$126
Q2
ICONIQ Partners, Alkeon,
Spark Capital Partners, Lux
Capital Management
Benchling
Provider of an electronic lab collaboration platform intended to
give scientists and management the software to access research
from big pharma and other leaders in the space.
$50
Q2
FirstMark Capital
Ezra
The company's device incorporates the use of AI to run MRI scans
that are analyzed by expert radiologists to help screen for
prostate cancer, enabling radiologists and medical professionals
to make their medical analysis more accurate and productive.
$18
Q2
BuildGroup
Benefitfocus
Cloud-based benefits management platform for consumers,
employers, insurance carriers, and brokers.
$80
Q2
GV, F-Prime, Andreessen
Horowitz, Transformation
Capital Partners
PatientPing
Develops a national care coordination network that connects
healthcare providers with real-time notifications wherever
patients receive care.
$60
Q2
Perceptive Advisors,
Regeneron Pharmaceuticals,
Foresite Capital, TPG, First
Round Capital, Northpond
Ventures, GV
DNAnexus
Developer of a biomedical informatics and data management
platform designed to analyze DNA-sequencing data.
$100
Q2
ICONIQ Partners
QGenda
Designs and develops automated physician scheduling software.
na
Q2
Francisco Partners
Management
Kyruus
Provides physician network optimization software solutions
$30
Q2
Blue Venture Fund, Horizon
Healthcare Services, CRV,
Echo Health, .406 Ventures
Abacus
Insights
Provider of data management platform intended to offer services
that alleviates traditional pain points.
$35
Q2
Andreessen Horowitz, Kaiser
Permanente, The Founders
Fund, Thrive Capital,
Investment AB Kinnevik,
Lakestar Advisors
Cedar, Inc.
Provider of payment solutions for multi-specialty medical groups,
community hospitals, and academic medical centers to improve
the patient billing experience.
$102
Q2
Insight Partners, New Leaf
Venture Partners, Eclipse
Ventures
BrightInsight
IoT platform that captures, transmits, and analyzes data from
connected medical devices and apps.
$40
Q2
Oak HC/FT, Echo Health,
Questa Capital, Humana,
Optum Ventures, Alta
Dispatch
Health
Provider of on-demand mobile and virtual healthcare services
intended to offer definitive and quality care.
na
Q2
Strategic Swiss Partners,
Fincasa Ventures
MediSponsor
Provider of practice management solutions for hospitals.
$50
Q2
Khosla Ventures, Lakestar
Advisors, General Catalyst
Partners, Alphabet, Thrive
Capital
Oscar
Provides health insurance services, a patient communication
platform, and a patient portal to manage their health.
$225
Copyright© 2020 Healthcare Growth Partners